Moving Towards a Cashless Society

Jon Lisby

Friday, August 19th, 2016

The Financial Times recently reported the dispute in the courts between the UK supermarket chain Sainsbury’s and MasterCard. The Competition and Appeal Tribunal concluded that MasterCard had broken EU and UK competition laws on interchange fees, and MasterCard will have to pay the grocery chain £ 68.5 million in damages.

Sainsbury’s argued that MasterCard’s default interchange fees, charged on a per transaction basis – were anti-competitive and excessive and, according to the ruling, the card fees had harmful effects for Sainsbury’s business. As the supermarket chain is required to accept cards from all issuers, it’s impossible not to deal with card companies such as MasterCard, which currently has 2.3 billion cardholders worldwide.

The decision against MasterCard paves the way for a series of court cases from other retailers who have also been affected by interchange fees. It may lead to card companies being forced to change their policies about this issue. There will undoubtedly need to be a strengthening of the regulatory environment and a far greater transparency of charging structures.

Alternative payment technologies

Moreover, this “economic empire” of business card providers could trigger an increased demand for alternative payment technologies and MasterCard’s lawsuit loss could spur us to move towards a cashless/chequeless and even a cardless society that solely uses mobile devices for financial transactions.

Credit and debit cards have reigned over virtual payments, and with the launch of mobile payment methods such as Apple Pay, Samsung Pay, and Android Pay, along with apps, a range of options where cash and cards are becoming unnecessary has been created. All of these changes are not something about to happen, they are already happening.